Moody’s Ratings has affirmed Yes Bank Limited’s Ba1 long-term foreign currency and local currency bank deposit ratings, maintaining a stable outlook. The agency also affirmed the bank’s Baseline Credit Assessment (BCA) at ba2. This affirmation follows the Supreme Court’s ruling on AT1 securities, with Moody’s expecting the bank to maintain its credit profile due to positive trends in funding, asset quality, and profitability, and a moderate likelihood of government support.
Moody’s Affirms Yes Bank Ratings
Moody’s Ratings has taken action on Yes Bank Limited, affirming its long-term foreign currency (FC) and local currency (LC) bank deposit ratings at Ba1. The agency also affirmed the bank’s Baseline Credit Assessment (BCA) and Adjusted BCA at ba2. Furthermore, the LT FC issuer rating, LT FC and LC Counterparty Risk Ratings (CRR), LT Counterparty Risk (CR) Assessment, and the senior unsecured medium-term note program rating have been affirmed at Ba1, Ba1(cr), and (P)Ba1 respectively. The Not Prime (NP) short-term FC and LC bank deposit ratings and related assessments were also affirmed.
Stable Outlook Maintained
Moody’s has maintained a stable outlook on the applicable ratings for Yes Bank. This decision reflects the agency’s expectation that the bank will sustain its overall credit profile despite a decline in its Common Equity Tier 1 (CET1) ratio following the Supreme Court’s ruling that invalidated the write-down of its additional tier 1 (AT1) securities. The impact of the lower CET1 ratio is mitigated by positive developments in the bank’s financial metrics, including improvements in funding, asset quality, and profitability.
Support and Capital Position
The Ba1 deposit ratings are positioned one notch above the bank’s ba2 BCA, signaling a moderate expectation of support from the Government of India. As of March 2026, the Tangible Common Equity to risk-weighted assets (TCE/RWA) ratio stood at 14.8%, indicating a moderate capital position prior to the ruling. While the reinstatement of AT1 securities will affect the CET1 ratio, Moody’s anticipates Yes Bank will replenish its capital buffers by raising new equity to support loan growth and strengthen its loss-absorbing capabilities.
Factors Influencing Ratings
The affirmation is underpinned by improvements in asset quality, with the gross nonperforming loan ratio declining to 1.2% as of September 2026. Annualised net income to tangible assets improved to 0.8% in the half year ending September 2026. Risks remain from rapid growth in small and medium-sized enterprise and retail lending. Potential upgrades could arise from an improved BCA or higher affiliate/government support, while downgrades could occur if funding or asset quality weakens significantly, or if the TCE/RWA ratio falls below 11% without a clear capital raising plan.
Source: BSE
